5 million student-loan borrowers may see their credit scores fall after CARES Act paused loan payments — ‘It’s another battle’May 23, 2020
On a Saturday morning earlier this month, Brooke Evans was participating in a conference via Zoom
when a distraction popped up. An email from Credit Karma, a company consumers can use to access their credit score, notified her that a remark had been added to her credit report via Equifax
the credit reporting agency.
Curious and diligent about monitoring her credit score, Evans started investigating. She learned that her credit score had dropped six points and the reason was tied to her student loans. Evans, who says she remained current on her $45,000 in student debt through a repayment plan that allows borrowers to make payments based on how much income they earn, was shocked to see her credit score had changed. “I didn’t know what the heck I had done,” she said.
‘It’s another pressure, it’s another thing to worry about, it’s another battle to have to fight. It’s too much.’
To find out her credit score inexplicably dropped in the middle of a pandemic that’s already creating so much uncertainty, was unsettling, Evans said. The 28-year-old, who says she is currently sheltering in a temporary living arrangement, worries that any ding to her credit score could impact her search for affordable housing.
“It’s another pressure, it’s another thing to worry about, it’s another battle to have to fight,” she said. “It’s too much.”
Eventually, after sending messages on Twitter
tagging the companies involved and eventually getting on the phone with her student-loan servicer, Great Lakes, Evans learned that her credit score decline was tied to the CARES Act, the $2.2-trillion stimulus bill that allowed student-loan borrowers to pause payments.
She appears to be one of up to roughly five million borrowers whose score was dinged, despite instructions from Congress that the pause on student-loan payments shouldn’t affect borrowers’ credit scores.
The situation highlights the challenges consumers are facing as they navigate pandemic-era relief programs. It also underscores the complex web of companies the hold sway over Americans’ personal finances, companies that control how consumers are judged through a process that’s poorly understood by the average person
A credit score is a crucial metric that lenders use to assess borrowers’ eligibility for auto, home and other loans — and the price they pay for those loans — as well as renting apartments and other major purchases. In…